“ The Payment of Wages Act, 1936”
Learning Objectives
Understand
● The applicability of the Act to certain
persons employed in any factory, railway and
various other establishments.
● The regulation and payment of wages by
the employer & authorized deductions to be made
from wages.
● The machinery provided under the Act
for enforcing specific claims arising out of delayed
payments, deduction from wages and appeals .
“ The Payment of Wages Act, 1936”
Structure
26.1 Introduction
26.2 Object of the Act
26.3 Applicability
26.4 Definitions
26.5 Wage Payment
26.6 Deductions from Wages
26.7 Authorities
26.8 Claims and Appeals
26.9 Offences & Penalties
26.10 Obligation of Employers
26.11 Summary
“ The Payment of Wages Act, 1936”
26.1 Introduction
In the light of recommendations of the Royal
Commissioner of Labour , the Government of India
introduced a Bill seeking to regulate the delays and
deductions in the payment of wages to industrial &
plantation labour.
The Bill was passed into the Act in 1936 &
came into force from 1937. The Act is in three parts.
The first part of the Act deals with the
regulation & payment of wages by employer, second
part deals with heads under which deductions can be
made from wages.
“ The Payment of Wages Act, 1936”
26.1 Introduction
The third & last part provides machinery for
enforcing specific claims arising out delayed
payments, deductions from wages , appeals etc.
In exercise of the powers conferred under the
Act, The Maharashtra Government framed rules
known as the Maharashtra Payment of Wages Rules,
1963.
This Act is self contained and provides its own
machinery for the disposal of the claims.
“ The Payment of Wages Act, 1936”
26.2 Object of the Act
The object of the Act is to regulate the payment
of wages to certain classes of persons employed in
industry in a particular form and at regular
intervals ; and to prevent unauthorized deductions
from the wages.
The Act is concerned merely with the fixation
of wage periods and not with fixation of wages.
“ The Payment of Wages Act, 1936”
26.3 Applicability
The Act is applicable to persons employed in
any factory , railway and to such other
establishments to which the State government may ,
by notification, extend the provisions of the Act.
The term establishment includes tramway
service, motor transport service, air transport service,
dock, wharf, mine, quarry, oilfield plantation, work
shop, construction development or maintenance of
buildings, roads , bridges and canals.
The Act applies to the wages which do not exceed
Rs. 6,500/- p.m.
“ The Payment of Wages Act, 1936”
26.4 Definition
Wages :- means all remuneration [whether by way of
salary, allowances or otherwise] expressed in terms of
money or capable of being so expressed which, if the
terms of employment, express or implied, were
fulfilled, would be payable to a person employed in
respect of his employment or of work done in such
employment.
It includes remuneration payable under award,
settlement, OT allowances, termination wages etc.
But excludes any bonus, value of accommodation,
pension or PF contributions etc.
“ The Payment of Wages Act, 1936”
26.5 Wage Payment
responsibility for payment of wages rests with
employer or his representative.
wage period shall not exceed one month. This
provision ensures there is no inordinate delay in
payment of wages.
Where less than 1000 persons are employed ,
wages shall be paid, before expiry of the 7th day, and
before 10th day in other cases. Termination wages are
to be paid within two working days.
employee’s consent shall be obtained for
payment of wages by cheque or by direct bank credit.
“ The Payment of Wages Act, 1936”
26.6 Deductions from Wages
The term ‘deductions’ is not defined in the Act.
But it specifies the heads under which deductions
may be made, namely, fines, deductions for absence
from duty, for damage to goods of the employer, for
house accommodation & any other amenities provided
by the employer. Deductions also be made for recovery
of loans, or advance, for IT payable by the employee,
for coop society contributions etc.
Deductions may be arranged with employee’s
consent, say for LIC premiums.
“ The Payment of Wages Act, 1936”
26.6 Deductions from Wages
Total deductions cannot exceed 50 % of wages
[75% in case of deductions for coop societies].
Conditions and limits have been specified on
imposition of fines.
An advance of wages shall not exceed four
months’ wages, number of installments in which it
is to be recovered cannot exceed 18, single
installment of recovery shall not exceed one third of
wages & interest shall not be > 6¼%.
“ The Payment of Wages Act, 1936”
26.7 Authorities
The Act makes provisions for appointment of
inspectors. The Inspector of Factories is also the
inspector under the Act.
The aggrieved person , his representative or
official of a registered trade union can submit
application to the authority within 12 months.
a] A presiding officer of a labour court,
tribunal; b] any commissioner of workmen’s
compensation , c] other officer with experience as a
judge of a civil court or a stipendiary magistrate are
prescribed authorities under the Act.
“ The Payment of Wages Act, 1936”
26.8 Claims and Appeals
Claims arising out of deduction from wages
and the delay in payment of wages shall be decided
by the Authority under the Act. The authority will
adjudicate on disputes related to deduction from and
delay in payment of wages and not to the wages.
An employer shall stand discharged of his
liability to pay unpaid wages if he pays them to the
nominee of the deceased person , or deposits the sum
with the authority.
“ The Payment of Wages Act, 1936”
26.9 Offences & Penalties
The Act prescribes penalties for offences
committed under the Act and the procedures to be
followed in trial of offences.
The jurisdiction of a civil court is barred in
entertaining any suit for the recovery of wages or
any deduction from wages.
Any contract or agreement whereby an
employed person relinquishes any right conferred by
this Act shall be null & void.
“ The Payment of Wages Act, 1936”
26.10 Obligation of Employers
1. To fix the wage period not exceeding one month.
2. To pay wages in cash or cheque after taking
written authorization of the employed person.
3. To pay wages on working day.
[Link] make only permissible deductions.
5. To ensure deductions do not exceed 75% of wages
where payment to coop society is to be made [50%
in other cases].
6. To seek before imposing fines, approval of list of
acts and omissions from the prescribed authority.
“ The Payment of Wages Act, 1936”
26.10 Obligation of Employers
7. Not to impose fines in excess of 3% of wages of an
employee.
8. To give show cause notice to employee before
imposing fine.
9. To recover fines within 60 days of the date of
offence.
10. To offer facilities to Inspectors for entry,
inspection, supervision, examination or inquiry
under the Act.
.
“ The Payment of Wages Act, 1936”
26.10 Obligation of Employers
11. To display abstract of the Act and the Rules in
English and local language understood by a
majority of workmen
12. To maintain following registers in the prescribed
forms
[i] Register of wages.
[ii] Register of fines
[iii] Register of deductions for damages or
loss.
[iv] Register of advances
“ The Payment of Wages Act, 1936”
26.11 Summary
The main purpose of the payment of Wages Act
is to ensure regular & prompt payment of wages &
prevent exploitation of the wage earner by prohibiting
unauthorized deductions from wages.
Persons drawing less the Rs. 6,500/- per
month in respect of a wage period, are covered under
the Act.
The Act applies to factories, railways, the
construction industry, civil air transport services,
motor transport services, mines, plantations,
oilfields, docks, wharfs or jetties.
“ The Payment of Wages Act, 1936”
26.11 Summary
The Act stipulates that wages must be paid
within seven days from the date of expiry of the wage
period in establishments employing less than one
thousand persons and within ten days in
establishments employing more than one thousand
persons.
It has laid down a machinery for enforcement
of different provisions of the Act and also penalties
for contravention of its provisions.
“ The Payment of Wages Act, 1936”
The End!
In the next session we cover chapter twenty seven on
“The Trade Unions Act, 1926”
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